KIEV, Feb 19 (Reuters) - Ukrainian President Viktor Yanukovich accused pro-European opposition leaders on Wednesday of trying to seize power by force after at least 26 people died in the worst violence since the former Soviet republic gained independence.

European Union leaders condemned what they called "the unjustified use of excessive force by the Ukrainian authorities" and said they were urgently preparing targeted sanctions against those responsible for the crackdown.

Protesters have been occupying central Kiev for almost three months since Yanukovich spurned a far-reaching trade deal with the EU and accepted a $15-billion Russian bailout.

The sprawling nation of 46 million people with an ailing economy and endemic corruption is the object of a geopolitical tug-of-war between Moscow and the West. That struggle was played out in hand-to-hand fighting through the night, lit by blazing barricades on Kiev's Independence Square, or Maidan.

Russian President Vladimir Putin's spokesman insisted the Kremlin was sticking to a policy of not intervening in Ukraine, although his point man has called for decisive action to crush the protests. The Kremlin said Putin and Yanukovich spoke by telephone overnight, calling the events an attempted coup.

Moscow announced on Monday a resumption of stalled aid to Kiev, pledging a $2-billion cash injection hours before the crackdown began, although the money has not yet arrived and the Kremlin spokesman would not say when it would be paid.

Ukraine's hryvnia currency, flirting with its lowest levels since the global credit crunch five years ago, weakened to beyond 9 to the dollar for the second time in February after the violence.

After a night of petrol bombs and gunfire on Independence Square, black smoke billowed from a burned out trade union building that protest organisers had used as a headquarters.

Security forces occupied about a third of the square - the part which lies closes to government offices and parliament - with protesters pouring in to reinforce their defences on the remainder of a plaza they have dubbed "Euro-Maidan".

In a statement posted online in the early hours, Yanukovich said he had refrained from using force since unrest began but was being pressed by "advisers" to take a harder line.

"Without any mandate from the people, illegally and in breach of the constitution of Ukraine, these politicians - if I may use that term - have resorted to pogroms, arson and murder to try to seize power," the president said.

He declared Thursday a day of mourning for the dead. The state security service said it had opened an investigation into illegal attempts by "individual politicians" to seize power.

A senior opposition leader, world champion boxer-turned-politician Vitaly Klitschko, walked out of a meeting with Yanukovich during the night, saying he could not negotiate while blood was being spilt.

When fighting subsided at dawn, the square resembled a battle-zone, the ground charred by Molotov cocktails. Helmeted young activists used pickaxes, and elderly women used their bare hands, to prise up paving to stock as ammunition.

The Health Ministry said 26 people were killed in the fighting in the capital, of which 10 were police officers. A ministry official, quoted by Interfax, said 263 protesters were being treated for injuries and 342 police officers, mainly with gunshot wounds.

The interior ministry said that five of the dead policemen had died of identical wounds from sniper fire to the head and neck. Journalists said they saw some hardline protesters carrying guns at the barricades.

EU WEIGHS SANCTIONS

In Brussels, European Council President Herman Van Rompuy said the 28-nation EU, at an emergency meeting on Thursday, would impose sanctions on those blamed for the bloodshed.

"Our ministers in the Foreign Affairs Council will at their meeting tomorrow examine targeted measures, such as financial sanctions and visa restrictions against those responsible for violence and use of excessive force," he said in a statement.

The European Investment Bank, the EU's soft-loan arm, said it had frozen its activities in Ukraine due to the violence.

The leaders of the EU's main powers, Germany and France, meeting in Paris, were to issue a joint statement on the crisis later in the day.

French President Francois Hollande backed Poland's call for "quick and targeted sanctions against those responsible". A German government spokeswoman said Chancellor Angela Merkel was "deeply saddened" by the escalation but when asked whether the time for EU sanctions, she said: "We are not yet there."

Swedish Foreign Minister Carl Bildt said on Twitter that Yanukovich now had "blood on his hands".

Diplomats cautioned that any sanctions would be largely symbolic, noting that similar Western measures had long failed to sway or unseat the rulers of Belarus or Zimbabwe.

At the Winter Olympics in Sochi, in neighbouring Russia, Ukrainian Olympic Committee chief and former world pole vault champion Sergey Bubka said he was shocked by the violence and called for an end to the bloodshed.

"There is no 'their' Ukraine, or 'your' Ukraine. It is OUR Ukraine," he said in a statement.

In soccer, a Europa League home match due to be played by Dynamo Kiev on Thursday was moved to Cyprus, the Ukrainian team's Spanish opponents Valencia said.

Protected by a barrier of shields, police destroyed protesters' tents and anti-government posters on the eastern side of the Kiev square.

A ring of fire blazed all day beneath a burned-out giant video screen that had relayed live pictures of opposition speakers, priests and singers addressing the crowds and leading patriotic singing.

Vesti newspaper, one of whose journalists was killed, ran a black front page bearing only the words "Black Tuesday".

In staunchly pro-European western Ukraine, protesters took over the regional authorities' headquarters in the cities of Lviv and Ivano-Frankivsk, and the regional parliament building in Lviv. Others blocked a road to a border crossing into Poland and torched the main police station in the city of Ternopil.

STANDOFF

Amid a tense standoff in the central Kiev square, thousands of protesters, many masked and in battle fatigues, confronted police across makeshift barricades for a second straight day.

As priests intoned prayers from a stage in the area still held by protesters, young men in hard-hats improvised forearm and knee pads to protect themselves against baton blows. Others prepared petrol bombs.

"They can come in their thousands but we will not give in. We simply don't have anywhere to go. We will stay until victory and will hold the Maidan until the end," said a 44-year-old from the western region of Ternopil who gave only his first name of Volodymyr.

Another protester, Vitaly, 36, said: "We will stay until victory. We want our children to grow up in a normal country where there are civilised laws not the laws of a penal colony."

Road traffic and trains entering Kiev were restricted and the capital's metro was closed to prevent protesters getting reinforcements.

Nationwide demonstrations erupted in November after Yanukovich bowed to Russian pressure and pulled out of a planned far-reaching association agreement with Brussels.

Western powers warned Yanukovich against trying to smash the demonstrations, urging him to turn back to the EU and the prospect of an IMF-supported economic recovery, while Russia accused them of meddling.

Ukraine has been rocked periodically by political turmoil since independence from the Soviet Union more than 22 years ago, but it has never experienced violence on this scale.

"We are now facing of one of the most dramatic episodes in Ukrainian history," opposition leader Arseny Yatsenyuk said in a video message after the talks with the president failed.

Monday's announcement of the $2 billion payment was seen as a signal that Russia believed Yanukovich had a plan to end the protests and had dropped any idea of bringing opposition leaders into government. (Additional reporting by Matt Robinson and Pavel Polityuk in Kiev, Adrian Croft in Brussels and Karolos Grohmann in Sochi; Writing By Paul Taylor; Editing by Alastair Macdonald)